Ethical Performance
inside intelligence for responsible business


Ministers seek holy grail of social return measure

June 2008

The UK government is to develop a standard way of calculating social return on investment. The Cabinet Office has set up a £350,000 ($690,000) three-year project to produce a measure, and says it will ‘bring together the public sector, independent investors and social enterprises to agree a standard methodology... that places a financial value on social benefit’.

One of the researchers’ tasks will be to put a figure on the value of jobs created by social enterprises, based on factors such as the savings in state benefit payments, reduced crime and health treatment, and additional tax income.

Cabinet Office minister Phil Hope, whose department is overseeing the research, said that the main purpose was to enable the increasing number of British social enterprises ‘to demonstrate their impact to investors and public services and help them attract funding’. An agreed measure could also guide the government when allocating its annual £100million investment budget for non-profit groups.

However, while the focus will be on small enterprises, specialists say any methodology that is developed should also be applicable to large companies. ‘There’s no reason why it cannot be used equally for a big company like Shell’, said Eva Neitzert, a project manager at The New Economics Foundation think-tank.

‘The basic task is to look at a company’s social and environmental impacts and attach a monetary value to each of them. That can be done across the board, with larger companies just as much as small ones and in the public and charitable sectors as well as the private.’

Assessing social return on investment has long been a tricky area, as placing a value on intangibles is notoriously difficult. Last year the Prince of Wales commissioned research into how businesses can formally calculate the social costs and benefits of their activities, but the final report failed to give concrete advice (EP9, issue 9, p5).

UK & NI Ireland | Government role

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